Fannie asks for another $8.4 billion

By Annalyn Censky, staff reporterMay 10, 2010: 11:38 AM ET

NEW YORK (CNNMoney.com) -- Fannie Mae requested another $8.4 billion from the federal government on Monday, saying that it expects its losses to continue because of trends in the housing and financial markets.

The government-controlled mortgage giant said it lost $11.5 billion in the first quarter of 2010, its 12th consecutive quarterly loss. In addition, Fannie paid out $1.5 billion dividend to the Treasury, which received stock after the government took it over in September 2008.

In the year-earlier quarter, Fannie suffered a $23.2 billion loss, but an accounting change makes comparing the year-over-year losses difficult.

Fannie's request for more federal funds comes just four days after Fannie's twin Freddie Mac also asked for a handout - to the tune of $10.6 billion - after posting an $8 billion quarterly loss.

In using Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) to prop up the mortgage market, the government in December lifted a $200 billion limit on their bailouts, essentially giving the twin housing lenders a blank check. Before their latest requests, Fannie Mae had already received $76.2 billion from the federal government andFreddie had gotten $50.7 billion.

The Obama administration has used the companies to support its foreclosure prevention efforts, have led to about 94,000 loan modifications by Fannie in the first quarter, compared with about 42,000 in the quarter before.

"We made solid progress in our ongoing efforts to keep people in their homes," Fannie Mae President and CEO Mike Williams, said in a press release.

Because they buy and guarantee mortgages, Fannie and Freddie are an important source of funding to banks and other home lenders, and their financial results are a key indicator of the housing market.

Fannie saw an increase in both delinquencies and foreclosures in the first quarter, which translated to big hits on its bottom line. The percentage of single-family homes delinquent on their mortgages increased to 5.47%, up from 5.38% in the previous quarter. The single-family foreclosure rate rose to 1.36%, compared with 1.03%.

The company blamed a weak economy, a prolonged decline in home prices and the still-high unemployment rate, which sits at 9.9%, for the rise in delinquencies and foreclosures. The same factors significantly reduced the value of the foreclosed properties Fannie already holds.

As for the future, Fannie said it expects to continue to post losses and ask for government help in upcoming quarters.

"Due to current trends in the housing and financial markets, we continue to expect to have a net worth deficit in future periods, and therefore will be required to obtain additional funding from Treasury," the company's press release said.

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